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No. This booklet thus would guide you through the basics of FEMA & the compliance requirement thereon. Sr. the Enforcement Directorate (ED). the much required inflows of foreign exchange have seen a rapid surge in the recent years. Accordingly.A Guide to FEMA With the liberalization of the Indian Economy and replacement of stringent Foreign Exchange Regulation Act (FERA) by a simpler Foreign Exchange Management Act (FEMA). INDEX Particulars Page No 1 2 3 4 5 6 7 8 9 Residential Status Types of Transactions Deposits by person resident outside India Export of Goods & Services Realization & repatriation of foreign exchange Import of Goods & Services Foreign Investment in India Establishment of a place of business in India Acquisition & Transfer of Immovable Property in India by a person resident outside India 01 03 06 08 12 13 14 20 24 26 26 27 10 Acquisition & Transfer of Immovable Property outside India by a person resident in India 11 Liberalised Remittance Scheme (LRS) 12 Announcements made in the Budget 2013 . Complying with this law is also very crucial from a monetary aspect as non-compliance of the same would lead to huge amount of penalties. 98. India has now become a highly attractive destination for foreign investors/NRIs to park their funds by way of Investing in India in Business Organisations. Recently.5 crore penalty notice to IPL team Rajasthan Royals for being accused of violating the Foreign Exchange law provisions. Banking industry etc. Indian Capital Market. a higher level authority under FEMA has slapped a Rs.
branch or agency in India owned or controlled by a person resident outside India (e) An office. Many privileges/benefits have been accorded to NRIs under FEMA. who is not an NRI. (b) A person residing in India for more than 182 days during the course of the preceding financial year. irrespective of his stay in India and irrespective of his purpose to go abroad or stay in India. branch or agency outside India owned or controlled by a person resident in India Largely. Person Resident outside is subdivided into following categories: (a) Non Resident Indian (NRI): it means an individual. he never becomes 'person resident of India' for that year e. The same are covered under different topics hereunder.g. it does not include a person who has come to or stays in India. PIO means either he or either of his parents or any of his grandparents were born in undivided India. A. 'person resident of India' includes person of India (except those staying abroad for work or business or for other purpose) and foreign persons who come to India or stay in India for employment. Branch. in such circumstances as would indicate his intention to in India for an uncertain period. or Agency in India owned or controlled by a person resident outside India Resident in India Office. Branch. 01 02 . or Agency outside India India owned or controlled by a person resident in India Resident in India Notes : Basic requirement for an individual to be a resident of India is that he/she should have stayed in India for more than 182 days during preceding year. However. (c) Any person or body corporate registered or incorporated in India (d) An office. B. it does not include a person who has gone out of India or stays outside India for employment outside India or carrying on business or vocation outside India or for any other purpose. However. branch or agency can be 'person'. Even office. (b) Non Resident: It means a person resident outside India. in either case otherwise than (i) He has come for employment in India or (ii) for carrying on business or vocation in India or (iii) for any other purpose.Residential Status: As application of Direct Tax laws heavily depends upon residential status of a person the same is a crucial factor that decides the application of FEMA provision & regulations. in such circumstances as would indicate his intention to stay outside India for uncertain period. who is either citizen of India or PIO (Person of Indian Origin). he can never be 'person resident in India' in 2004-05. Person Resident outside India (PROI) [section 2(w)]: It means a person who is not resident in India. carrying out business or other purpose. if a person stayed in India in 2008-09 for 182 days or less. The above could be easily understood in a diagrammatic manner highlighted below: Person Residing in India > 182 days during preceding year Comes to India/ stays in India For Employment Resident in India For carrying Business Resident in India For an uncertain period Resident in India For Employment Person Resident outside India Goes out of India/ Stays out of India For carrying Business Person Resident Outside India For an uncertain period Person Resident Outside India Person Any person or Body corporate registered in India Residen in India Office. If he/she did not. Person Resident in India means the following [Section 2(v)]: (a) A person residing in India for more than 182 days during the course of the preceding financial year.
g. • Generally capital account transactions are deemed to be prohibited unless specifically permitted. 03 04 . education and medical care of parents. football pools.000 per remitter/ donor per annum B. sweepstakes etc. • The definition is 'inclusive' that means besides aforesaid expenses. rent expenses etc… • Generally there are no restrictions on current account transactions unless there being a specific restriction by Central Government or RBI. There are transactions (i) for which withdrawal of foreign exchange is prohibited. spouse & children. including contingent liabilities outside India of person resident in India (ii) a transaction which alters the assets or liabilities in India of person resident outside India. personal expenses of travel. Current Account Transactions: It means a transaction other than a capital account transaction. spouse and children residing abroad and Expenses in connection with foreign travel. other current business. services and short term banking and credit facilities in the ordinary course of business (b) (c) (d) Payments due as interest on loans and as net income from investments Remittances for living expenses of parents. or any other hobby •Remittance for purchase of lottery tickets.Types of Transactions : Under FEMA there are mainly two types of transactions: A. Schedule II Government approval: • Cultural Tours • Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping Schedule III RBI approval exceeding a specified monetary limit : • Gift Remittance exceeding US $ 5000 per remitter/ donor per annum • Donation exceeding US $ 10. Illustrative transactions Schedule I Prohibited Transactions: • Remittance out of lottery winnings • Remittance of income from racing/riding etc. In includes the following: (a) Payment due in connection with foreign trade. Capital Account Transactions: It means (i) a transaction which alters the assets or liabilities. any expenditure which is not a “capital account transaction” will also be a current account transaction e. (ii) which require prior approval of central Government [Schedule II]. banned/prescribed magazines. [Schedule I]. education & medical care. (iii) which require prior approval of RBI [Schedule III].
in any form. includes deposit of money with a bank. Non-resident (Ordinary) Account Scheme (NRO Account) B. Savings. Transactions specified in Schedule I. which is engaged or proposes to engage: i. Recurring or Fixed Type of Account Deposit Accounts Repatriable/ Non-Repatriable Joint Accounts Jointly with residents Repatriable Current. corporate body. Non-resident (External) Account Scheme (NRE Account) C. proprietary concern. Transactions specified in Schedule II. construction of residential/ commercial premises. In real estate business. a person resident outside India. or iv. or ii. or iii. or (For the purpose of this regulation 'real estate businesses' shall not include development of townships. Acceptance of deposits by an Authorized Dealer Bank from PROI would be as under: A. In agriculture or plantation activities. Prohibited Capital Account Transactions: No person resident outside India shall make investment in India. or on behalf of.Permissible Capital Account Transactions: i. company. whether incorporated or not. partnership firm. In the business of chit fund. Foreign Currency (Non-resident) Account Banks Scheme (FCNR(B) Account) Description of the above accounts in a comparative table is highlighted below: Foreign Currency (Non-resident) Account (Bank) (FCNR(B) Account) NRI (Individuals/ entities of Bangladesh/ Pakistan nationality/ ownership requires RBI approval) Description Non-ordinary Rupee Account (NRO Account) Person Resident Outside India (Individuals/ entities of Bangladesh/ Pakistan nationality/ ownership requires RBI approval) Non-Resident (External) Rupee Account Scheme (NRE Account) NRI (Individuals/ entities of Bangladesh/ Pakistan nationality/ ownership requires RBI approval) Who can open account Non-repatriable (Except under USD 1 million per FY scheme) Current. in any company. a capital account transaction referred to in section 6(3)(f) and subsection (2) of sec. or partnership firm or proprietary concern or any entity. In trading in Transferable Development Rights (TDRs) 05 Deposits by Persons Resident Outside India [PROI]: Deposit. Savings. As Nidhi Company. roads or bridges) v. of a person resident in India ii. of a person resident outside India Illustrative transactions Schedule I: • Investment by a person resident in India in foreign securities • Foreign currency loans raised in India & abroad by a person resident in India • Transfer of immovable property outside India by a person resident in India Schedule II: • Issue of a security by a body corporate or an entity in India and investment therein by a person resident outside India • Acquisition and transfer of immovable property in India by a person resident outside India • Guarantee by a person resident in India in favor of. 47 of FEMA. or construction of farm houses. trust or any other person. Recurring or Fixed Deposit Accounts Two or more NRI Repatriable Term Deposits Same as NRE account 06 .
• Transfer from NRO account within the overall limit of USD 1 million • Local Rupee payments • Local disbursements • Remittance outside India • remittance outside o f c u r r e n t India income in India (net of • t r a n s f e r t o o t h e r taxes) NRE/FCNR account etc • transfer to NRE account subject to overall ceiling of USD 1 million Same as NRE account (except for transfer from NRO account) Export of Goods & Services : Export trade is regulated by the Directorate General of Foreign Trade(DGFT).outside India Income tax exemption on interest Loans/overdrafts to R/ firms/ Indian/ companies against security of FD in NRO account subject to conditions Not allowed Same as NRE account 3 4 Same as NRE account Not taxable PP SOFTEX For exports otherwise than by post including export of software in physical form For exports declared to Customs offices Duplicate & appended to shipping bill notified by the Central Government which have introduced Electronic Data Interchange (EDI) system for processing shipping bills For Export by post Duplicate Triplicate For export of software otherwise han in physical form • Declaration should be supported by evidence. Declaration as regards export of goods and services Major Permissible Debits Same as NRE account • Exporter to furnish a declaration to RBI or other prescribed authority • Showing Full Export Value Full value of export to be the amount that exporter expects to receive in case full export value is not ascertainable at the time of export. 1 2 Form GR SDF Purpose of Form Copies to be submitted Duplicate Same as NRE account Loan to third parties Loan. other than NRIs can open only an NRO account for deposit with AD. Form & manner of export declaration Declaration should be submitted in sets of numbers as specified.e.Major Permissible Credits • Remittance in ermitted • R e m i t t a n c e i n foreign currency permitted foreign • Deposit by account currency holder during mporary • Proceeds of foreign visit to India currency/bank notes • Transfer from rupee t e n d e r e d d u r i n g a c c o u n t o f n o n . • Transfer from other NRE account.temporary visit to India resident banks etc. To NRE Account Transfer of Funds permissible between different (within USD 1 million) accounts Loan. • Showing full export value • Exporter to take necessary steps to ensure realization of export proceeds 08 Taxable • It is to note here that foreign nationals i. No.to Rupee loan against account security of fixed deposits holders for personal purpose or business purpose except for relending or agricultural/ plantation activity or for investment in real estate business To NRO account not permissible For personal purpose or business purpose except for relending or agricultural/ plantation activity or for investment in real estate business For direct investment in India in firms/companies on non-repatriation business For purpose of flat in India for own residential purpose Fund based/ non-fund based to Resident/ firms/ Indian/ companies against security of FD in NRE account subject to conditions Fund based or non-fund based to or in favor of NRI or to third parties Not taxable Not applicable • Exporter to take necessary steps to ensure realization of export proceeds i. Prescribed declaration forms by FEMA regulations are as under: Sr. A. 07 .
hire or any manner other than sale or disposal as such requires RBI approval. whether accompanied or un-accompanied Ship's stores & transhipment cargo Goods supplied under the orders of Central Government also goods supplied for military. Generally within one year from the day of export. Export on elongated credit terms: Exports on elongated credit term requires RBI approval. banker's cheques. [Note: Counter Trade Proposal for transaction taking place between the Indian Party & the overseas party through Escrow Account opened in India in US Dollar will be considered by RBI subject to certain conditions. Receipt of Export Proceeds • Export proceeds to be realised within the period specified. the exporter shall be under obligation to ensure that: 09 10 . Lease/Hire: Export of goods on lease.000 Gifts less than Rs.by bank drafts. • Receipt of payment . naval or air force requirements Goods or software accompanied by a declaration by the exporter that they are not more than US $ 25000 in value Gift of goods accompanied by a declaration by the exporter that they are not more than five lakh rupees in value. Aircrafts or aircraft engines and spare parts for overhauling and/or repairs abroad subject to their re-import into India after overhauling /repairs. Certain Export requires prior approval: Following exports need prior approval of RBI: i. Goods imported free of cost on re-export basis Goods not exceeding US $1000 or its equivalent in value per transaction exported to Myanmar under Barter Trade Agreement between the Central Government and the Government of Myanmar Replacement goods exported free of charge in accordance with the provisions of EXIM Policy in force Goods sent outside India for testing and re-import Defective goods sent outside India for repair and re-import Exports permitted by RBI as per conditions stipulated in the permission. any arrangement involving adjustment of value of goods imported into India against value of goods exported from India requires RBI approval. Imports on re-export basis Small value goods to Myanmar Replacement goods exported free of charge Goods sent for testing and re-import Defective goods sent abroad for repair and re-import Exports with permission of RBI D. from a buyer outside India. ii.] Goods of value less than USD 25. B. Exemption from declaration: Export of goods or service may be made without furnishing the declaration in the following cases: Particulars Trade Samples Baggage Stores/Transhipment Cargo Government/ Ministry supplies Description Trade samples of goods and publicity material supplied free of payment Personal effects of travelers. Counter Trade: Counter Trade i. • Re-import within the period of realization of export proceeds is considered to be realization. Five Lakhs Aircrafts for overhauling C. payment from FCNR/NRE account of buyer or International Credit Cards. Advance Payment received by exporter from foreign buyer: Where an exporter receives advance payment (with or without interest).e.ii. foreign currency. iii. within a period of six months from the date of their export.
• Repatriate to India' means bringing into India the realized foreign exchange and (i) selling of such foreign exchange to an authorised person in India in exchange for rupees or (ii) the holding of realised amount in an account with an authorized person in India to the extent notified by RBI.(i) The shipment of goods is made within one year from the date of receipt of advance payment. (iii) The documents covering the shipment are routed through the authorized dealer through whom the advance is received. if any. • A-Prior approval of RBI required in case shipment of goods is to be made beyond the period of one year from the date of receipt of advance payment. should be made with prior approval of RBI. • Remittance towards refund of advance payment in case of failure to ship the goods should within one year. (ii) The rate of interest. and • To take necessary steps to realize the foreign exchange due. payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points. It also includes use of realized amount for discharge of a debt or liability denominated in foreign exchange. 11 12 . Realization & Repatriation of Foreign Exchange: • A person resident in India to realize and repatriate to India such foreign exchange which has accrued to him or is due to him.
PIO. Foreign Venture Capital Investments D. Other Investments E. FVCIs Other Investments (G-sec. Route FIIs Foreign Venture Capital Investments NRIs. Investments on non-repatriable basis Let us try and understand each of them separately: 13 14 . exceeding a specified sum a declaration form has to be filed. However. • For Deferred payment arrangements for remittances exceeding six months from the date of shipment procedural guidelines of External Commercial Borrowings & Trade Credits is to be followed. foreign investment in India can be under the following heads: A. • No limit on import of foreign exchange. Permission for remittances exceeding the above time limit depends upon facts & circumstances. QFIs NRIs. NCDs.Import of Goods & Services Import trade is regulated by the Directorate General of Foreign Trade (DGFT). Foreign Investment in India A schematic representation for foreign investment in India is highlighted below: • An application in form A-1 to be made for import exceeding USD 5000 • Banks can freely open letters of credit and allow remittances except for goods requiring special licenses. PIO Persons Resident outside India Persons Resident outside India VCF. PIO. IVCUs As it is clearly a highlighted above broadly. • Advance remittance for import of goods is allowable subject to certain conditions. QFIs SEBI regd. Foreign Direct Investment in India [FDI] B. Foreign Portfolio Investment C. Foreign Direc Investments Automatic Route Foreign Investments Foreign Portfolio Investments Govt. etc. • BPO companies allowed making remittances towards the cost of equipment to be imported at their overseas site.) FIIs Investments on non -repatriable basis NRIs. • Generally the time limit for import remittances is six month from the date of shipment of goods.
Filing of form FC-TRS within 60 days from date of receipt of consideration 5 Prior Permission of RBI ii. investments can be made in shares. partially convertible would have to be done in accordance with External Commercial Borrowings (ECB) guidelines. Fully & mandatorily convertible debentures and fully & mandatorily convertible Preference shares^ • Fresh Issue≠ . 1 Eligible Investors for FDI Types of Instruments 2 Description Any PROI#*. No. mandatorily & fully convertible debentures and mandatorily & fully convertible preference shares of an Indian company by nonresidents through two routes: i.e. pricing guidelines. Sr. 16 15 .Filing of form FC-GPR with AD Bank within 30 days of from issue of shares • On Transfer of shares: . No. the foreign investor or the Indian company does not require any approval from the Reserve Bank or Government of India for investment. Equity shares. Particulars Sr. Particulars Description • Acquisition/transfer of existing shares: . issue or acquisition of shares/convertible debentures and preference shares. Foreign Investment Promotion Board (FIPB) for the investment.e. Automatic Route: Under the automatic route.A.For unlisted companies: Negotiated price should not be less than fair value as determined by a CA or SEBI registered Merchant Banker applying DCF method 4 Mode of Payment • Inward remittance through normal banking channels. manner of receipt of funds. 3 Pricing ^ Issue of other type of preference shares such as optionally convertible. 6 Reporting (Compliance) # Other than a citizen of Pakistan & an entity incorporated in Pakistan * A citizen of Bangladesh or an entity incorporated in Bangladesh can invest in India under FDI with prior approval of the FIPB. the foreign investor or the Indian Company should obtain prior approval of the Government of India. NRI • Conversion of royalty/lump sum/ technical knowhow fee due for payment or conversion of ECB • Conversion of import payables/pre incorporation expenses • Transfer of share by way of gift by a resident to a PROI • Deferment of receipt of consideration on transfer of share to non resident • On Issue of sharesπ : .For unlisted companies: fair value as determined by a CA/SEBI registered merchant banker applying Discounted Cash Flow Method (DCF). Under the FDI scheme. Ministry of Finance.Intimation to RBI via AD Bank in a specified form within 30 days of receipt of consideration .For listed companies: on the basis of SEBI guidelines . or an entity incorporated outside India. The details of the entry route applicable and the maximum permissible foreign investment/ sectoral cap in terms of percentage in an Indian Company are determined by the sector i n which it is operating. Foreign Direct Investment in India Government of India along with Ministry of Commerce & Industry & Department of Industrial Policy & Promotion issues a 'Consolidated FDI Policy Circular' on a yearly basis on March 31 of each year which prescribe amongst other things the mode of investment i. Government Route/Approval Route: Under the Government Route. and reporting of investments to the Reserve Bank. • Debit to NRE/FCNR account of a person concerned i.For listed companies: Negotiated price should not be less than price as per SEBI guidelines .
4 5 Short Selling Transfer of Shares Compliance Chart Receipt of funds for Foreign Investment Intimation to RBI within 30 days of Receipt Issue of shares within 180 days from the date of Receipt of Funds Filing of Form FC-GPR within 30 days from the date of issuance of shares Filing an Annual Return with RBI for position of foreign investment # QFIs would mean nonresident investors. No. 3 Trading in exchange traded derivatives Description • FIIs are allowed to trade in all approved exchange traded derivatives on a repatriable basis. other than SEBI registered FIIs & FVCIs. Particulars Sr. Foreign Venture Capital Investments Particulars Sr. Foreign Portfolio Investment Particulars Sr. C. • NRIs are allowed to trade in all approved exchange traded derivatives but on a non repatriable basis. • Shares should be issued within 180 days from the date receipt of consideration. No. • For FIIs allowed • For NRIs not allowed • Shares acquired under PIS cannot be transferredunder a private placement unless approved by RBI. 1 Who can invest Description • Foreign Institutional Investors (FIIs) registered with SEBI • NRIs • SEBI approved sub account of FII • Qualified Foreign Investor in listed equity shares# • An individual FII/SEBI approved sub account = maximum of 10 percent of paid-up capital • Total holding of all FIIs/SEBI approved sub accounts of FII shall not exceed 24 percent • NRI can invest under PIS route up to 5 percent of the paid up capital • Ceiling on Total holding of all NRIs is 10 percent • For QFIs the same limit would apply as applicable to NRIs 3 Type of Instrument 2 Ceiling on investment 4 Mode of Investment 17 18 . • QFIs not allowed. No. 1 Who Can Invest 2 Where to invest Description A SEBI registered Foreign Venture Capital Investor (FVCI) with specific approval from RBI • In Indian Venture Capital Undertaking (IVCU) or • Venture Capital Fund (VCF) or • In a scheme floated by such VCFs • Investment in securities on a recognized stock exchange subject to provisions of SEBI (FVCI) regulations • Equity/Equity linked instruments • Debt/Debt instruments • Debentures • Units of schemes/funds set up by a VCF • Through IPOs • Private Placement • Purchase from third party • Private arrangement B.≠ The same pricing guidelines are also applicable for issues of shares against payment of lump sum technical know-how fee / royalty or conversion of ECB into equity or capitalization of pre incorporation expenses/import payables.
However Regulatory & non-government approval from Development organisations/no Department of Authority of India n-profit Banking (IRDA) organisations/for Operations & • Foreign Banks eign government Development. units of domestic mutual funds. units of money market mutual funds. • Maximum investment by SEBI registered FIIs in Government Securities at present is USD 25 billion Establishment of a place of business in India: A body corporate incorporated outside India (including a firm or other association of individuals) can establish a place of business in India by setting up a Branch office (BO) or Liaison Office (LO) or a project office (PO). Other Foreign Investments: Particulars Sr. would require bodies/departme RBI. foreign office.e. transfer IDRs of eligible companies resident outside India • Not redeemable into underlying equity shares before the expiry of one year period from the date of issue • Compliance with Foreign Exchange Management (Issue or Transfer of Foreign Security) Regulations at the time of redemption • Proceeds on the issue of IDRs to be repatriated outside India immediately • Investment in Government securities. 1 Investment by NRIs Description • Investment in shares/convertible debentures. Various Global Funds etc… are eligible to invest • Eligible Instruments Foreign Currency & Rupee denominated bonds & Rupee denominated bonds • Overall Maximum foreign investment limit USD 25 billion (USD 12 billion by FIIs. opening Branch Insurance However. treasury bills. Operations & Development (DBOD).D. other various global funds) 3 Eligibility Criteria 19 20 . A comparative table describing all the three options: Particulars Sr. Who can open 1 Branch Office (BO) Liaison Office (LO) Project Office (PO) Foreign Companies A body corporate Same as BO/ incorporated outside India (including a firm or other association of Individuals) • Prior approval of • Prior approval of • No Prior approval RBI RBI from RBI subject • Foreign Banks do • Foreign Insurance to certain conditions not require Companies except intimation separate approval would require to RBI within 2 under FEMA for approval from months.Direct Route i. treasury bills.Indirect Route i. • Without limit on non-repatriable basis • Sale proceeds to be credited to NRO account if on nonrepatriable basis • Can also invest in non-convertible debentures both on nonrepatriable basis as well as repatriable basis subject to certain conditions • NRIs not allowed investing in Public Provident Fund (PPF). • Profit making track record during preceding five financial years in home country • Profit making track record during preceding three financial years in home country General permission of RBI is available to foreign companies if they satisfy followings: 2 Investment in IDRs 2 Permission for setting up 3 Investment by FIIs in other securities 4 • Permitted to invest on repatriable basis in rupee Investment by QFIs in denominated units of equity schemes of SEBI registered units of Domestic Mutual domestic MFs Fund & debt securities • Investment can be made by two routes . USD 3 billion by QFIs & USD 10 billion by NRIs. SEBI registered Depositary Participant route . Government securities. No. • Can be issued by non-resident companies in India • SEBI registered FIIs and Sub-accounts & NRIs may invest. units of money market mutual funds. No. Unit Confirmation Receipt (UCR) Route • Permitted to invest in debt securities on repatriation basis subject to certain conditions 5 Investment in Infrastructure Debt Funds (IDF) • FIIs. NRIs. HNIs.e. RBI. units of domestic mutual funds. purchase. approval from nts would require Department of prior permission Banking of RBI. hold.
market survey. income or revenue earned Acquisition of Can acquire C a n a c q u i r e Can invest in Immovable immovable property i m m o v a b l e i m m o v a b l e Property on ownership/lease property only on property without lease that to not p r i o r a p p r o v a l e x c e e d i n g f i v e subject to certain years conditions Compliances • Annual Activity • Annual Activity • Annual certificate Certificate (AAC) Certificate (AAC) from a CA from CA along from CA along showing the with the audited with the audited project status and balance sheet to balance sheet to that the accounts be submitted to be submitted to of the PO has AD bank with a AD bank with a been audited and copy to Director copy to Director activities are as General of Income General of per approval by Tax (International Income Tax RBI.000 of USD 50. New (International • Submit a report Delhi on or Taxation). Operating time 7 limit 8 9 10 11 6 Local expenses can Local expenses can be met through be met only out of inward remittances inward remittances or local earnings Local expenses can be met through inward remittances or local earnings Branch Office (BO) Liaison Office (LO) Project Office (PO) Does not have any LO shall be opened PO has time limit as t i m e l i m i t f o r for a period of three per Contract c a r r y i n g o n years and further Agreement business renewal can be obtained through AD Permanent Regarded as a PE in Not regarded as a Regarded as a PE in Establishment India of the foreign PE in India subject India of the foreign company t o D T A A a n d company Domestic Tax/laws subject to liaison activities only Required to file Compliance Required to file Required to file requirements under return of Income in return of income. Particulars Branch Office (BO) Liaison Office (LO) • Not less than • Not less than USD 100. No. The project is funded by inward remittance or ii. communication activity etc permitted Permitted activities Eight activities permitted by RBI for BO.Sr. a company or entity in India awarding the contract has been granted term loan by a Public Financial Institution (PFI) No prescribed form as such PO can only execute projects Particulars Sr. Taxation). No.000 of Net worth as per Net worth as per the latest Audited the latest Audited Balance Sheet certified by a CPA 4 5 Application Form • Form FNC • Form FNC Only information collection. return of income in respect of BO Income Tax Act Not liable for respect of PO operations income tax as no operations.the project has been cleared by an appropriate authority or iv. New as per prescribed before 30th format on an Delhi on or September every annual basis with before 30th year September every the Director • Submit a report 21 22 . the project is funded by a bilateral or multilateral International Financing Agency or iii. Local manufacturing & retail trading are not permitted Funding for local operations Project Office (PO) FC has secured a contract from an Indian Company to execute a project in India and i.
state government) • Can acquire by way of inheritance from a resident in India • Can acquire property on lease for a term not exceeding 5 years 23 24 . 2 Type of property 3 Mode of acquisition 4 Mode of payment 5 Misc * Foreign nationals of non-Indian origin: • Require to obtain prior approvals and fulfill the requirements. 1 Who can acquire Description • NRIs • PIOs • A person who has established a branch.Sr. Particulars Branch Office (BO) Liaison Office (LO) Project Office (PO) as per prescribed year format on an • Submit a report as per annual basis with prescribed the Director format on an General of Police annual basis (DGP) of the state with the Director concerned General of Police (DGP) of the state concerned General of Police (DGP) of the state concerned Acquisition & Transfer of immovable property (IP) in India by a person resident outside India: A. if any prescribed by the other authorities (e. No. Acquisition Particulars Sr. office or other place of business in India • Certain other specified categories like foreign nationals*. • No restriction on number of properties that can be purchased by an NRI or PIO.g. diplomats (subject to certain conditions) Any immovable property in India (other than an agricultural property (AP) / plantation (PL)/ farm house (FH)#) • Purchase • By way of gift from a person resident in India/NRI/PIO • By way of inheritance from a person resident in India or a person resident outside India who had acquired such property in accordance with applicable forex laws at the time of acquisition of property • By inward remittance through normal banking channels or • By debit to NRE/FCNR(B)/NRO account • No requirement to file any document with RBI after acquisition of immovable property by NRI/PIO • Foreign nationals establishing a place of business have to file a declaration within 90 days from the date of acquisition with RBI. No.
1 Who can remit 2 3 Up to what limit Type of transactions Description A resident individual USD 200.business purposes . 26 Anyone R/ROI R ICROI .Resident ROI . repatriation of sale proceeds is restricted to not more than two such properties • Sale proceeds of property acquired by way of gift should be credited to NRO account only Acquisition & Transfer of immovable property outside India by a person resident in India: A.Indian Citizen Resident Outside India PIOROI .B. 1 Who can transfer 2 3 Type of property Mode of transfer Description Person resident in India Any immovable property outside India • Sale • Gift Acquisition and subsequent transfer of immovable properties by an NRI & PIO for an easy reference is summarized as follows: Acquisition/ Transfer of property in India by an ICROI ICROI Acquire IP other than AP/PL/FH Purchase Gift R/ICROI/ PIOROI Inheritance IP (including AP/PL/FH acquired as Resident/Inherited Transfer IP IP other than AP/PL/FH ICROI/ PIOROI Liberalised Remittance Scheme (LRS): Particulars Sr. Transfer Particulars Sr.residential purpose of its staff Any immovable property outside India • Purchase out of funds held in Resident foreign currency account • By way of gift from a person resident in India 5 Repatriation of funds on transfer 2 3 Type of property Mode of acquisition # has to comply with the guidelines issued by the RBI from time to time. Acquisition Particulars Particulars Sr. No. No.Person of Indian Origin Resident outside India R . 1 Who can transfer 2 3 4 Type of property Mode of transfer To whom Description • NRIs • PIOs* Any IP in India (other than an AP/ PL/ FH#) • Sale • Gift • A person resident in India • NRI • PIO • Allowed subject to certain conditions & with a ceiling on how much can be repatriated • In case of residential property. No. No. B. Transfer Particulars Sr. • Acquisition of immovable property • Investment in Shares listed and unlisted • Investment in debt instrument • Investment in mutual funds • Purchase of any other asset located outside India • remittance towards gifts & donation • Purchase of objects of art Prescribed application-cum-declaration form to be filed with RBI. 1 Who can acquire Description • Person resident in India with certain conditions • Indian Company# for: .000 per financial year For permitted capital or current account transactions e.Resident outside India Acquisition/Transfer of property in India by an PIOROI PIOROI Acquire IP Other than AP/PL/FH Purchase Anyone Any IP Gift R/ICROI/ PIOROI Other than AP/PL/FH Inheritance R/ROI Transfer IP AP/PL/AH (acquired by way of inheritance Residential/ Commercial Property Sale R Gift/Sale R Gift/Sale R/ICROI/ PIOROI 4 Compliance 25 .g.
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